FICC

Our Portfolio Allocation Summary for December 2024.

President Trump’s victory has injected a dose of uncertainty into the outlook for commodity markets. Most notably, the new administration’s energy policies are likely to be part of the early agenda. Changes in US domestic and foreign policies will also impact the outlooks for gold and industrial metals. In this Strategy Report we highlight the likely consequence of Trump’s election on the major commodities.

Corporate bond spreads have tightened significantly during the past month, even as the range of economic outcomes consistent with stable credit spreads narrows.

October CPI numbers for Canada, the UK and Japan were released last week. This Strategy Insight examines the respective underlying drivers of inflation in those three economies and discusses the implications for monetary policy.

Special Report

Today’s Special Report introduces a framework for country allocations in a fixed income portfolio based on relative monetary policy surprises. We present two approaches on how to identify opportunities in the current environment and update our country recommendations based on those.

We update our inflation forecast following this morning’s CPI release, concluding that TIPS breakeven inflation rates have room to fall.

Our Portfolio Allocation Summary for November 2024.

This week, we update our Central Bank Monitors (CBMs), that help us calibrate how monetary policy should be adjusted in developed-market economies. Our conclusion is that while overall, easier monetary settings are required, there a few trade ideas that arise from the divergences in signals amongst G10 countries.

Special Report

We expect a copper supply-demand deficit to emerge in 2026 and widen into the end of the decade. This will provide a tailwind for copper prices over a long-term horizon. That said, we believe a better opportunity to position for a structural uptrend in copper prices will arise over the coming six-to-nine months.